The Costs of Residential Geothermal
How much does a geothermal system costs?
When you talk about a geothermal pump you are usually discussing some sort of heating and cooling system. The
modern geothermal pump, or GHP, relies on the constant temperature of the earth (only a few feet below the surface)
as a sort of “exchange medium”. During cooler weather the GHP will pull the heat from the ground – which retains a
constant temperature between 45°F to 75°F - and carry it indoors via a specially designed system. During the warmer
months it can also reverse the process and distribute the warmer air back into the ground.
The Costs of Residential Geothermal
Geothermal heating is one of the newest options for utilizing an earth friendly (and wallet friendly) approach
to home heating and cooling. It is also something that can be used to create domestic hot water if necessary too.
When considering geothermal heating costs, however, it can be a bit confusing.
Why? There is the cost of the installation, which many people feel is a bit prohibitive due to the planning,
designing, drilling, and actual installation. There is also the cost of running the system, which can be
dramatically lower than almost any other type of heating and cooling system.
Let’s first consider the proverbial “down side,” which is the price for the installation. The basic cost for a
system will be based on the “per ton of capacity”. For example, if an installer charges $2,500 for a ton of
capacity, the price for a three ton system for the standard 2k square foot home will cost around $7,500.
How does this measure up to a standard home heating and cooling system? It tends to be almost twice as much to
install the geothermal system! This is unfortunate because so many people want to pay the lowest fees “up front”,
but they don’t consider the long term. For instance, a standard home heating system that relies on fuel oil and
electricity may cost around $4,000 to be installed, but it also costs a lot more than that to continually operate
The question is to understand how the pricing is “broken out” for the geothermal systems. For instance, more than
half of the cost will be dedicated to the “loop” portion of the system, and this is what involves the drilling and
digging in order to install the pipes that gather or distribute heat. The rest of the price will go to the pump,
fan and heat exchanger that feed the air into the ductwork throughout the home.
There can be costs associated with things like water heating equipment, landscaping and extra fees for new
ductwork, but we won’t consider those during a basic review of costs.
So, it costs roughly twice as much for someone to get the geothermal installation…what are the operating fees? This
is where the costs are easily and quickly offset. For example, the average geothermal system is going to use around
50% less energy than a traditional home heating and cooling system. Additionally, they demand far less out of
pocket energy expenses as well. This often allows a homeowner to payback the costs of installation in as little as
five to ten years afterward.
Consider too that once the payback period is reached, it can be almost as if the system is heating the home for
almost nothing, in terms of financial fees, every month. The system will also produce no pollution as well, and
this is a win-win situation for the homeowner who is helping to protect the environment too!
A geothermal system is expensive to install, but it costs little to operate, demands almost no maintenance and
upkeep, and will pay for itself in as little as five years’ time.
How It All Works
Before we discuss how the geothermal pump works, we need to look at a geothermal heating system. It is
interesting to note that the modern designs have been in use since the 1940s, but have only really “taken off” in
terms of installation in homes over the past few decades.
A geothermal heating (and cooling) system is actually very basic and easy to understand. It helps to consider it by
its other name which is a “ground source heating system”. This means that the heat is pulled from the ground via a
cleverly designed “closed loop” system of pipes that are buried in the ground beneath a home or property. These
pipes contain water or a refrigerant that is circulated through, and which pull the existing heat from, their
surroundings. The heat is circulated back up through the pipes where the warm liquid from the ground is passed in
front of a fan or blower unit.
The fluid remains contained within the pipes at all times (hence the “closed loop) and the fan simply blows air
around the pipes to force the heat into the ductwork. This is an overly simplified explanation of how geothermal
works, but it does help to give you a good idea of the total absence of traditional energy supplies for a large
portion of the system.
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